Goldman Still Likes Big Banks

NEW YORK (TheStreet) -- Goldman Sachs (GS Quote) is staying bullish on three consumer-heavy financial firms -- JPMorgan Chase (JPM Quote), Bank of America (BAC Quote) and Capital One (COF Quote).

The firm said in a research note on Monday that it continues to favor big banks and credit card companies over regional banks. Specifically, it told clients that losses for consumer and C&I (commercial and industrial) loans were trending better than it had previously expected.

"A lower consumer cumulative loss outlook simply formalizes what we have been saying for some time -- rate of change of unemployment matters more than the level," the note says. "If unemployment flattens out at a high level, consumer credit will improve."

Goldman has buy ratings on all three of the aforementioned companies as well as Wells Fargo (WFC Quote). It currently does not have an equity rating on Citigroup (C Quote).

As for regional banks, the firm remains said it remains cautious "given diverging credit trends between consumer and commercial real estate coupled with over-earning on fees vs. a continued depressed environment for net interest income."

Since March 2009, Goldman's estimate for total U.S. losses from the credit crisis has been a range of $2.1 trillion to $2.6 trillion, or about a 10% aggregate loss on U.S. debt. So far, banks have recognized about $1.6 trillion, or roughly two-thirds, of this figure, the note says.

The losses are shaping up to be primarily from increasing prime residential mortgage and commercial real estate loan losses and less from losses on consumer loans, such as credit cards and auto loans, and C&I loans, according to Goldman.